FORT WORTH, Texas--(BUSINESS WIRE)--Teletouch Communications, Inc. (OTC: TLLE.PK), a leading U.S. cellular services provider and mobile electronics retailer, recently reported its audited consolidated results on Form 10-K, for its 2009 fiscal year ended May 31, 2009.

Key financial metrics and related events of 2009 include:

• Through continued margin growth and expense management, the Company is reporting a net loss of $1.9 million for fiscal year 2009, a greater than $5.0 million improvement over the prior year results, after excluding the approximately $3.8 million one-time non-cash gain from the Company’s June 2007 settlement with AT&T, shown in the fiscal year 2008 results.
• Operating income in 2009 was a positive $0.7 million, a $1.5 million improvement from an operating loss of approximately $0.8 million in fiscal year 2008, after excluding the approximately $3.8 million one-time non-cash gain on its settlement with AT&T from the fiscal year 2008 results.
• Total selling, general and administrative expenses for 2009 were reduced by $3.0 million or 15% from the prior year period, most notably due to a reduction in salaries and other personnel expenses of $1.7 million, and changes in advertising expenditures from traditional mass media (print, radio, TV) vehicles to affinity group and sports marketing relationships, which realized an additional greater than $0.5 million savings.
• Cash flows from operations improved approximately $10.5 million in 2009, with cash provided from operations of $4.2 million in 2009 as compared to cash used in operations of approximately $6.2 million in 2008. Note: For comparative purposes, during 2008, the Company paid $4.7 million in accounts payable due to AT&T as part of a settlement reached in June 2007, and paid $2.0 million to PCI’s prior senior lender to have all remaining obligations of the Company under that debt facility terminated. Even excluding these two significant cash uses in 2008, the Company still improved cash flows during 2009 by $3.8 million through improved margins and continued management of its operating assets and liabilities.
• Adjusted EBITDA, excluding stock-based compensation expense and certain extraordinary litigation costs, was $2.7 million, an improvement of $3.9 million compared to 2008, after excluding the approximately $3.8 million one-time non-cash gain from its settlement with AT&T in the 2008 results. The improvement in adjusted EBITDA was primarily due to lower operating expenses. A reconciliation of GAAP to non-GAAP results have been provided in the financial statement tables included in this press release.
• Reported for fiscal 2009, and effective August 1^st, the Company amended the terms of its previous $5.25 million revolving credit facility, while simultaneously retiring its prior receivables factoring agreement, and consolidated both facilities with its senior lender, Thermo Credit, LLC, resulting in, among other changes, the availability under the revolving credit facility being increased from $5.25 million to $18 million and the maturity of the revolver being extended from April 30, 2010 to January 31, 2012 (See Note 8 & 16 – Subsequent Events in the Form 10-K for more details).

In addition to stronger fundamentals, the Company achieved a number of other significant milestones:

• Opened Teletouch-branded retail locations under a new Exclusive Retailer Agreement with T-Mobile USA, Inc. (NYSE: DT), the Company’s first new carrier relationship in several years. T-Mobile is the second largest GSM-network-based U.S. wireless carrier, and a division of Deutsche Telekom AG, the third largest wireless carrier provider in the world.
• Completed its acquisition of a minority percentage of Redmond, WA-based Mobui, Inc. (“Mobui”), an advanced mobile applications development and content delivery company with a growing catalogue of proprietary mobile applications, content and delivery platforms, including those for Apple Inc.’s (NASDAQ: AAPL) iPhone, Research in Motion Ltd’s (NASDAQ: RIMM) Blackberry devices and the new Google Inc. (NASDAQ: GOOG), Android G1. After providing start-up debt financing through May 31, 2009, substantially all of the principal previously loaned to Mobui has been repaid to the Company.
• Remediated all previously identified and reported material weaknesses in the Company’s internal control over financial reporting from the previous fiscal 2008 year, concluding that our internal controls and procedures were effective as of May 31, 2009. Fiscal 2009 was the Company’s second year of providing a report of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
• The Going Concern explanatory language was removed from the 2009 audit opinion issued by the Company’s Independent Registered Public Accounting Firm, BDO Seidman, LLP. During 2009, the Company resolved many of its prior business and financial uncertainties, through continued improvements to the Company’s operations and financial condition, and the long-term renewal of its primary financing facility.

“After focusing this year primarily on stabilizing our businesses, improving profitability, completing the 2009 fiscal year financial audit in a timely manner and remediating our 404-compliance issues, we are now in a much stronger position to focus on new growth opportunities, whether organically or acquisition driven,” said T. A. “Kip” Hyde, Jr., President, COO and Director of Teletouch. “In addition, we remain committed to regaining visibility in the marketplace, with growth, such that we will have the future opportunity to re-list on a major stock exchange. The steady progress we have made and will continue to make should help our eventual success in this goal.”

Investors should be advised that while the Company is not current with its reporting requirements, it has received certain requested relief on its delinquent prior period Quarterly Reports from the Securities and Exchange Commission (“SEC”). In short, the Company was granted relief under its proposal whereby the Company would file its delinquent fiscal 2008 Quarterly Reports, but would not have to file its delinquent fiscal 2007 Quarterly Reports. In granting the Company relief from filing its 2007 Quarterly Reports, the SEC staff reminded Teletouch that its acceptance of the fiscal 2008 Quarterly Reports as sufficient to bring Teletouch up to date with its filings (“currency” in this regard), it would not mean that the completion of such prior period 2008 Quarterly Report filings would be deemed as "timely" for the purposes of certain corporate events, including the availability of Form S-3 and Form S-8 registrations. The Company’s most recent timely filing of this fiscal 2009 Annual Report on Form 10-K begins a period of “timely filing” for determining the Company's future eligibility for these Forms. In addition, the SEC indicated that it would advise further consultation with the staff regarding when Teletouch would be deemed up-to-date in its filings, for the purposes of the availability of Rule 144 resale of restricted securities. The Company anticipates filing its delinquent fiscal 2008 Quarterly Reports by December 31, 2009, and that all fiscal 2010 Quarterly Reports will be filed timely.

For the fiscal year ended May 31, 2009, the Company announced the following results [the Tables below present selected financial data, including certain non-GAAP measures; see Teletouch’s fiscal 2009 Form 10-K filed on August 31, 2009 for complete financials and additional information]:

Table 1 – Explanatory notes: The Company bills its customers in excess of its reportable GAAP revenues, in the form of “Gross cellular subscriber billings,” a non-GAAP financial measure, described as the total recurring monthly cellular service charges invoiced to the Company’s wireless subscribers. The Company takes 100% of the accounts receivable risk for all of its billings, before deducting a fixed percentage of the dollars invoiced for cellular usage that are payable to AT&T under the Company’s various master distributor agreements.

In order to provide an understanding of how the Company arrives at its Total Operating Revenue (a GAAP measure of results), Table 1 below denotes how the Company’s Gross subscriber billings and its related revenue sharing deductions are combined to reach the GAAP results. That is, after deducting AT&T’s percentage revenue sharing, the remaining amounts (including billings for the Company’s own products and services), are retained by the Company as compensation for the services provided to these subscribers, such net amounts representing the revenue under GAAP that is reported by the Company (net revenue reporting). The “net revenue adjustment” amount is the total payment to AT&T for its component of the subscriber billings, and can be added back to GAAP “Service, rent and maintenance revenue” and “Total operating revenue” to better understand the Company’s total annual billings.

The Company refers to the total amount invoiced to its customers for services or goods as Gross Billings, which is a non-GAAP measure. The Company believes Gross Billings is more comparable to the total operating revenues reported by its wireless competitors, and is a better measure of the total volume of cash generating transactions processed by the Company during each period, which the Company further believes provides a clearer understanding of the operations, costs and risks associated with the Company’s core cellular business.

TABLE 1		Year Ended May 31,														2009 vs 2008
(dollars in thousands)		2009				% of Oper Rev			2008				% of Oper Rev			$ Change				% Change
Service, rent, and maintenance revenue
Cellular operations service, rent and maintenance revenue		$	25,353			55	%		$	26,644			49	%			(1,291	)		-5	%
Add: net revenue adjustment (revenue share due AT&T)			34,150							36,274							(2,124	)		-6	%
Gross cellular subscriber billings			59,503							62,918							(3,415	)		-5	%
Other operations, service rent and maintenance revenue			1,857			4	%			2,258			4	%			(401	)		-18	%
Gross service, rent and maintenance billings		$	61,360						$	65,176						$	(3,816	)		-6	%
Product sales revenue			18,647			41	%			25,621			47	%			(6,974	)		-27	%
Gross billings		$	80,007						$	90,797						$	(10,790	)		-12	%
Less: net revenue adjustment (revenue share due to AT&T)			(34,150	)						(36,274	)						2,124			-6	%
Total Operating Revenue (GAAP)		$	45,857			100	%		$	54,523			100	%		$	(8,666	)		-16	%

Teletouch Communications, Inc.
Financial Highlights
(in thousands, except shares and per share amounts)
		Year Ended May 31,
		2009				2008				Change
Summary Operating Results:
Service, rent and maintenance revenue		$	27,210			$	28,902			$	(1,692	)
Product sales revenue			18,647				25,621				(6,974	)
Total revenues			45,857				54,523				(8,666	)
Cost of service, rent and maintenance revenue			(8,784	)			(10,367	)			1,583
Net book value of products sold			(17,332	)			(22,831	)			5,499
Margin on service, rent and maintenance revenue			18,426				18,535				(109	)
Margin on product sales revenue			1,315				2,790				(1,475	)
Margin on total revenues			19,741				21,325				(1,584	)
Operating income			672				2,984				(2,312	)
Net loss		$	(1,922	)		$	(3,075	)		$	1,153
Basic and diluted loss per share of common stock		$	(0.04	)		$	(0.06	)		$	0.02
Weighted average shares outstanding:
Basic and diluted			49,051,980				48,871,706				180,274
Other Data:
Operating income		$	672			$	2,984			$	(2,312	)
Less: Gain on forgiveness of trade payable obligation to AT&T (1)			-				(3,824	)			3,824
Adjusted operating income (loss) (2)			672				(840	)			1,512
Net loss			(1,922	)			(3,075	)			1,153
Less: Gain on forgiveness of trade payable obligation to AT&T (1)			-				(3,824	)			3,824
Adjusted net loss (2)			(1,922	)			(6,899	)			4,977
Net loss			(1,922	)			(3,075	)			1,153
Add back:
Depreciation and amortization			1,406				1,524				(118	)
Interest expense			2,330				3,895				(1,565	)
Income tax expense			264				164				100
EBITDA (3)			2,078				2,508				(430	)
Add back: Stock based compensation expense			223				110				113
Add back: Extraordinary trademark litigation expense			440				-				440
Less: Gain on forgiveness of trade payable obligation to AT&T (1)			-				(3,824	)			3,824
Adjusted EBITDA (3)		$	2,741			$	(1,206	)		$	3,947
Selected Balance Sheet Highlights
(in thousands)
		May 31,				May 31,
		2009				2008				Change
Cash		$	4,642			$	4,729			$	(87	)
Current portion of long-term debt (2)			1,313				9,727				(8,414	)
Long-term debt, net of current portion			15,103				7,429				7,674
Current Assets			16,899				19,679				(2,780	)
Current Liabilities			19,704				28,692				(8,988	)
Working Capital			(2,805	)			(9,013	)			6,208

Notes:

(1) In June 2007, Teletouch recognized a one-time, non-cash gain from the forgiveness of certain trade payable obligations to AT&T after reaching a settlement over disputed roaming charges.

(2) Adjusted operating income and adjusted net loss means operating income and net loss less the one time gain recorded in June 2007 (fiscal 2008) related to a roaming charge dispute with AT&T. Adjusted operating Income and adjusted net loss are non-GAAP measures that the Company believes allows for a better comparison of the operating results for its fiscal 2009 to its fiscal 2008.

(3) Teletouch's EBITDA means loss before depreciation and amortization, interest expense and income tax expense. Adjusted EBITDA is EBITDA less expense for stock-based compensation, less certain extraordinary trademark litigation expense incurred in 2009 and continuing through at least 2010 and less the one time gain on the roaming charge settlement with AT&T (see (1) above). EBITDA and Adjusted EBITDA are both non-GAAP measures that the Company believes allows for a more complete analysis of our results.

Disclosure of Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes the presentation of certain non-GAAP financial measures provides useful information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations, and that when GAAP financial measures are viewed in conjunction with the non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance. In addition, these non-GAAP financial measures are among the primary indicators management uses as a basis for evaluating performance. For all non-GAAP financial measures in this release, we have provided corresponding GAAP financial measures for comparative purposes.

We refer to the term “EBITDA” or “Adjusted EBITDA” in various places of our financial discussion. EBITDA is defined by us as net income (loss) before interest expense, income tax expense, and depreciation and amortization expense. Adjusted EBITDA will include the foregoing calculation, as well as certain other exclusions as may be defined therein when such term is used. Neither EBITDA nor Adjusted EBITDA are a measure of operating performance under GAAP and therefore should not be considered in isolation nor construed as an alternative to operating profit, net income (loss) or cash flows from operating, investing or financing activities, each as determined in accordance with GAAP. Also, EBITDA should not be considered as a measure of liquidity. Moreover, since EBITDA is not a measurement determined in accordance with GAAP, and thus is susceptible to varying interpretations and calculations, EBITDA, as presented, may not be comparable to similarly titled measures presented by other companies.

About Teletouch Communications

For over 40 years, Teletouch has offered a comprehensive suite of telecommunications products and services under the Teletouch, AT&T® and T-Mobile® brands, including cellular, two-way radio, GPS-telemetry, wireless messaging and public safety/emergency response products and services. Teletouch operates a chain of retail stores under the “Teletouch” brand, including service offerings for T-Mobile and its own two-way radio network. Teletouch’s wholly-owned subsidiary, Progressive Concepts, Inc. (PCI), is a leading provider of AT&T Mobility (voice, data and entertainment) to consumers, businesses and government agencies. For over 35 years, PCI has also offered consumer electronics products and services through its own chain of retail stores under the “Hawk Electronics” brand; as well as through its own network of Hawk-branded sub-agents, direct sales force and on the Internet at various sites including: www.hawkelectronics.com and www.hawkexpress.com. In addition, PCI operates a national wholesale distribution business, PCI Wholesale, which serves major carrier agents, smaller retailers and rural cellular carriers, as well as automotive retailers and auto dealers throughout the country; with ongoing product and sales support through www.pciwholesale.com and www.pcidropship.com, among other sites. Teletouch sells safety and emergency response vehicle products and services business under the brand “Teletouch EVP” (Emergency Vehicle Products) directly and through www.teletouchevp.com. Teletouch periodically acquires minority equity positions in various cellular-related technology companies, including most recently, Apple, Inc. iPhone mobile applications developer/provider, Mobui Corporation; www.mobui.com. Teletouch's common stock is traded Over-The-Counter under stock symbol: TLLE. Additional information about the Teletouch family of companies can be found at www.teletouch.com.

The statements in this news release that do not directly relate to historical facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous risks and uncertainties, many of which are outside the Company’s control. As such, no assurance can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Factors could cause actual results to differ materially from such forward-looking statements. For a description of these factors, see the Company’s prior filings with the Securities and Exchange Commission, including our most recent filing. Teletouch disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future event, or otherwise.

The registered trademarks of AT&T, T-Mobile, and each, any and all brands, products or service names discussed in relation to contractual relationships with Teletouch Communications, Inc., Progressive Concepts, Inc., Hawk Electronics and or its affiliates, are the property of their respective owners.

Teletouch Communications, Inc.
Investor Relations
Amy Gossett, 800-232-3888
investors@teletouch.com